TECHNOLOGY investments are the top investment priority for small businesses in South-east Asia this year. They are counting on technology to overcome the impact of the Covid-19 pandemic on their operations.
This priority applies even to small businesses that face cash flow concerns, United Overseas Bank (UOB) and Dun & Bradstreet said in a joint release on Wednesday.
The release cited findings from a survey by UOB, Accenture and Dun & Bradstreet in the third quarter of 2019 and in May 2020, which polled 1,000 small businesses with an annual turnover of US$20 million and below in five countries - Indonesia, Malaysia, Singapore, Thailand and Vietnam.
Technology was ranked the top investment priority for 2020 by 64 per cent of businesses surveyed, followed by investments in developing employees' skills (51 per cent), and in machinery or equipment (40 per cent).
Among the five countries polled, Thailand had the highest proportion (71 per cent) of respondents prioritising technology investments this year, followed by Indonesia (65 per cent), Vietnam (63 per cent), Singapore (60 per cent) and Malaysia (59 per cent).
Small businesses from the food and beverage, information and communications technology and healthcare sectors (50 per cent) indicated the strongest desire to boost their technology investments, followed by those in construction (48 per cent) and retail trade (46 per cent).
Although 88 per cent of businesses had lowered their revenue expectations in 2020, 44 per cent said they still planned to increase their overall technology budget.
"This suggests that Asean (Association of South-east Asian Nations) small businesses are looking beyond the present challenges and are set on adopting technology to improve their competitiveness and sustainability," the release said.
In terms of cash flow issues, three-quarters of businesses polled are seeking deferments on their loan repayments and renegotiating the terms of their contracts with suppliers and landlords, while 73 per cent are looking to Covid-19-related financing schemes to increase their working capital.
Eight in 10 respondents ranked the use of digital solutions as their most preferred cash flow management method.
UOB head of group business banking Lawrence Loh said that many small businesses are now turning to technology to revise business models or transform operations.
The lender is helping its small business customers identify and implement digital solutions to manage their operations effectively and virtually, he added.
Accenture's managing director of financial services in Asean Divyesh Vithlani said the focus on technology among small businesses is likely to further intensify as more of these businesses prepare to reopen after a "very challenging period", and are looking to reinvent themselves to ensure long-term competitiveness and resiliency.
"Small businesses that focus on their digital transformation to become more agile and future-proof should see a rapid payback," he noted.
"These investments in technology will be essential because small businesses are the bedrock for countries in the region and also our growth engine, so the rebound of SMEs (small and medium enterprises) post-Covid-19 will be fundamental for a speedy recovery of Asean economies."
Dun & Bradstreet Singapore chief executive Audrey Chia said: "Despite the uncertainties on the trajectory of Covid-19, the long-term growth potential for Asean remains, given the region's favourable demographics and rising consumption.
"While Asean small businesses are facing current challenges brought about by Covid-19, we can see that they are still taking practical steps to increase their business resilience to prepare for the future."